Former British Prime Minister Margaret Thatcher is but a fading memory — at least when it comes to British taxes.
Gordon Brown, Great Britain’s Chancellor of the Exchequer (and the heir apparent as Labor’s next candidate for prime minister), is raising tax rates to their highest level in British history.
Next year, tax revenue as a share of the economy will be 37.8 percent, up from 37.6 percent this year. And it will rise to 38.1 percent the year after. The previous high was 37.7 percent, a disgraceful summit the Brits crested in the early 1980s.
To put those numbers in context, consider that the federal tax burden in the U.S. is 25.4 percent of the economy (2004) — which in itself is too high. Or look at it this way: The London Times reports that at those lofty rates, tax revenue will be flooding into the British treasury at nearly 1 million pounds — about $1.74 million (U.S.) — a minute.
How things have fallen since the Iron Lady yanked the country back from edge of the abyss! Under her watch from 1979 to 1990, taxes were cut; and the economy, boosted by the privatization of nationalized industries, lower government spending and a deregulation regime, responded with strong growth.
“If the British economy were a garden, Mrs. Thatcher's technique would be to clear the weeds so that a thousand flowers could bloom,” wrote Charles Moore last year in the London Telegraph, which he edited from 1995 to 2003. One gets the impression that the best description of the Gordon Brown economy is, “Poison the flowers because they make the weeds look bad.”
The 1.75 percent economic growth last year was Britain’s slowest expansion since 1992 — which, not coincidentally, was shortly after Thatcher left office. And it’s going to get worse if the tax burden keeps growing. Great Britain is not immune to Eurosclerosis, which it had a bad case of until Thatcher took office.
Having failed to learn the lesson taught them by the Iron Lady, the British are going to learn something from Gordon Brown — and then maybe they’ll look for another Margaret Thatcher.